Access Pricing,Quality Degradation,and Foreclosure in the Internet

Access to both a local and a global network is needed in order to get complete connection to the Internet. The purpose of this article is to examine the interplay between those two networks and how it affects the domestic public policy towards a domestic provider of local access. We find that a cost-oriented regulation is detrimental to domestic welfare, because it shifts profit to the foreign provider of global access. The optimal policy is that the regulator commits itself to set an access price above costs, possibly the same price as in an unregulated market economy. A regulation of the global access price has a non-monotonic effect on domestic welfare, and there is a potential conflict between international and domestic regulation policy.     

Regulations for the Eighth International Congress of Actuaries

Abstract

The present paper proposes and investigates a procedure for numerical evaluation of the transition probabilities for a time-inhomogeneous Markov process when the intensities are known (estimated). The procedure is based on Taylor-expansion of the transition probabilities linked with the Chapman-Kolmogorov equations.     

Portfolio optimization under model uncertainty and BSDE games

We consider robust optimal portfolio problems for markets modeled by (possibly non-Markovian) Itô–Lévy processes. Mathematically, the situation can be described as a stochastic differential game, where one of the players (the agent) is trying to find the portfolio that maximizes the utility of her terminal wealth, while the other player (“the market”) is controlling some of the unknown parameters of the market (e.g., the underlying probability measure, representing a model uncertainty problem) and is trying to minimize this maximal utility of the agent. This leads to a worst case scenario control problem for the agent. In the Markovian case, such problems can be studied using the Hamilton–Jacobi–Bellman–Isaacs (HJBI) equation, but these methods do not work in the non-Markovian case. We approach the problem by transforming it into a stochastic differential game for backward stochastic differential equations (a BSDE game). Using comparison theorems for BSDEs with jumps we arrive at criteria for the solution of such games in the form of a kind of non-Markovian analogue of the HJBI equation. The results are illustrated by examples.     

Strategic Regulation Policy in the Internet

Some countries are importers while others are exporters of global backbone connectivity. At the same time, input components such as local access are non-traded. This paper analyzes a non-cooperative regulatory game between importing and exporting countries, assuming that the prices of both traded and non-traded inputs can be regulated. We show that exporting countries choose a more restrictive regulation of non-traded goods than importing countries do. We further show that a requirement of international non-discrimination may hurt importing countries, and give firms producing traded inputs incentives to invest in quality degradation.     

Evaluating,Comparing, Monitoring,and Improving Representativeness of Survey Response Through R‐Indicators and Partial R‐Indicators

Non‐response is a common source of error in many surveys. Because surveys often are costly instruments, quality‐cost trade‐offs play a continuing role in the design and analysis of surveys. The advances of telephone, computers, and Internet all had and still have considerable impact on the design of surveys. Recently, a strong focus on methods for survey data collection monitoring and tailoring has emerged as a new paradigm to efficiently reduce non‐response error. Paradata and adaptive survey designs are key words in these new developments. Prerequisites to evaluating, comparing, monitoring, and improving quality of survey response are a conceptual framework for representative survey response, indicators to measure deviations thereof, and indicators to identify subpopulations that need increased effort. In this paper, we present an overview of representativeness indicators or R‐indicators that are fit for these purposes. We give several examples and provide guidelines for their use in practice.     

Monetary incentives and environmental concern. Effects of a differentiated garbage fee

Market-based instruments, i.e., economic incentives and disincentives, are gaining popularity in environmental policy. However, research on the effectiveness of economic incentives for regulating environmentally relevant consumer behaviour demonstrates convincingly that the implementation of this instrument is based on inadequate assumptions concerning the motivation guiding consumer behaviour. In this paper it is argued that stronger focus should be placed on studying how the regulation instrument influences the perception of the environmentally relevant activity that it was meant to regulate. The attitudes of Danish citizens towards differentiated garbage fees (implying a relatively small economic incentive) and the impact of its implementation on the attitude towards recycling are analysed. The attitude towards differentiated garbage fees is primarily determined by the perceived equity of differentiated garbage fees and its perceived effectiveness with regard to combating waste problems. The most important determinant of the attitudes towards recycling activities is the expected environmental and public benefits. However, empirical support is found for the hypothesis that the use of monetary incentives at the consumer level may re-frame the recycling issue into the sphere where private cost-benefit calculations apply. The negative effects of this re-framing can more than outweigh the positive impact of the monetary incentive on attitudes and behaviour.

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Zusammenfassung Monetäre Anreize und Umweltbewutsein. Die Wirkung differenzierter Müllgebühren. Marktkonforme Instrumente wie ökonomische Anreize oder Strafen werden in der Umweltpolitik immer populärer. Allerdings zeigen Forschungsergebnisse über die Wirksamkeit ökonomischer Anreize für die Regulierung umweltrelevanten Konsumentenverhaltens, da\ die Anwendung dieses Instrumentes auf unzweckmä\igen Annahmen über die Motivation beruht, die dem Verbraucherverhalten zugrunde liegt. In diesem Beitrag wird gefordert, da\ die Frage stärker in den Mittelpunkt gerückt werden mu\, wie das Regulierungsintrument die Wahrnehmung des umweltrelevanten Verhaltens beeinflu\t, das reguliert werden soll. Eine empirische Studie untersucht die Einstellungen dänischer Bürger gegenüber differenzierten Abfallgebühren (die einen relativ kleinen ökonomischen Anreiz bieten) und die Wirkung dieser Ma\nahme auf die Einstellung gegenüber der Wiederverwertung. Die Einstellung zu differenzierten Müllgebühren wird in erster Linie durch ihre wahrgenommene Gerechtigkeit bestimmt und durch ihre wahrgenommene Wirksamkeit gegenüber den Müllproblemen. Die wichtigsten Determinanten der Einstellung gegenüber der Müllwiederverwertung sind ihre erwarteten allgemeinen Umweltvorteile. Allerdings sprechen die Daten für die Hypothese, da\ monetäre Anreize das Thema der Müllwiederverwertung auf Verbraucherebene auf das Niveau privater Nutzen-Kosten-Kalkulationen herunterdrücken. Die negativen Effekte dieser Verschiebung könnten die positiven Wirkungen monetärer Anreize auf Einstellung und Verhalten sogar überkompensieren.

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The research reported in this paper was sponsored by grants from the Danish Environmental Protection Agency and the Danish Social Science Research Council.     

Cognitive,Emotional, and Sociocultural Processes in Consumption

This article examines deliberative, emotional, and sociocultural processes in consumption. The authors draw upon basic processes from two leading theories in social psychology, the theory of planned behavior (TPB) and the model of goal‐directed behavior (MGB), to develop a comprehensive approach to decision making more appropriate for many consumption decisions, and revise the representation and modeling of key variables to better reflect how social psychological processes relate to consumer behavior. A survey was conducted among real adult consumers of bacalhau in Portugal. Because it is most common for women to prepare bacalhau meals in Portugal, 153 female participants were recruited for this survey. The results show that the TPB, and especially the MGB, are found to explain food consumption decisions well but only after the approaches are modified in form and content to accommodate the complex emotional and social aspects of the consumption context. The results also show that the effects of key determinants of desire in the MGB are contingent on the traits of food involvement and cultural orientation (i.e., degree of vertical individualism). The approach taken herein overcomes limitations of existing theories by synthesizing relevant processes across two leading theories and by introducing new variables and processes, thereby showing that the organization of these processes and their contingency on cultural variables regulate consumption.     

Taxes,Tuition Fees,and Education for Pleasure

The fact that education provides both a productive and a consumptive (nonproductive) return has important and, in some cases, dramatic implications for optimal taxes and tuition fees. Using a simple model, we show that when the consumption share in education is endogenous and tuition fees are unconstrained, the optimal tax/fee system involves regressive income taxes and high tuition fees. A progressive labor income tax system may, on the other hand, be a second‐best response to politically constrained, low tuition fees. Finally, the existence of individuals with different abilities will also move the optimal income tax system toward progressivity.     

The cointegrated vector autoregressive model with general deterministic terms

In the cointegrated vector autoregression (CVAR) literature, deterministic terms have until now been analyzed on a case-by-case, or as-needed basis. We give a comprehensive unified treatment of deterministic terms in the additive model $X_t=\gamma Z_t+Y_t$, where $Z_t$ belongs to a large class of deterministic regressors and $Y_t$ is a zero-mean CVAR. We suggest an extended model that can be estimated by reduced rank regression, and give a condition for when the additive and extended models are asymptotically equivalent, as well as an algorithm for deriving the additive model parameters from the extended model parameters. We derive asymptotic properties of the maximum likelihood estimators and discuss tests for rank and tests on the deterministic terms. In particular, we give conditions under which the estimators are asymptotically (mixed) Gaussian, such that associated tests are ${\chi }^2$-distributed.     

The Path to Service Encounter Performance in Public and Private ‘Bureaucracies’

This article examines the evolution of building societies against a background of environmental change. By the application of specific analytical measures developed by Ansoff five distinct periods of change can be isolated. Key events in the environment have become progressively more novel, less predictable and costlier to deal with, which, in turn, has necessitated both operational and strategic redirection.